Burning Down the House, by Martha Thomases – Brilliant Disguise | @MDWorld
December 22, 2012 Martha Thomases 0 Comments
Assuming the world didn’t end yesterday (which would be a good thing, because there is still chocolate in my apartment that I haven’t eaten yet), we are facing the possibility of going over the so-called “fiscal cliff.” This is what happens when the Bush tax cuts expire at the same time that automatic spending cuts kick in, cuts negotiated last year during the arguments over raising the debt limit.
One would think that deficit hawks like Paul Ryan would think this is a wonderful thing. By raising revenues and slashing spending, we might lower the debt, thereby saving the grandchildren they were so concerned about during the Presidential campaign. However, because this involves cuts to defense spending (along with cuts to social programs — that was the 2011 compromise), and the ending of tax rates lowered during the Bush administration, which would feel like a tax increase, they’re against it.
(The Bush tax cuts were set to expire because they cost so much money, thereby increasing the debt, and there are laws on the books limiting such losses. Please note that most of the Republicans who were in office then voted for it, despite their now bedrock belief in balanced budgets.)
Along with the deficit hawks, everyone else seems to think that going over this fiscal cliff is a bad idea. The stock market goes up and down, depending on how likely a deal seems to be. The piece to which I linked to above says, “If all of the laws went into effect as scheduled and stayed in effect, the result would undoubtedly be a return to recession.”
Yes, taking hundreds of billions of dollars out of the American economy, as tax increases to the middle class, cuts to Social Security, ending the extended unemployment benefits and more, will result in a recession. It is Keynesian economics 101, which even the non-Keynesian libertarians who whittled down the stimulus bill four years ago would seem to acknowledge.
President Obama campaigned — and won — on a platform calling for raising the tax rates of households earning more than $250,000 a year. Yet Republicans won’t listen.
There is an alternate GOP plan that will accept a rise in tax rates for the 375,000 households earning more than $1 million a year. I find it difficult to imagine that this will make much of a dent in the deficit. It will, however, only alienate 375,000 voters.
Obama has relented, and is willing to limit tax increases to those making more than $400,000 a year. He’s also offered limitations to cost-of-living increases to Social Security. The Republicans in Congress have, at least publicly, said,”No,” to these proposals.
Looking at this in political terms only, I don’t see a reason not to go over the cliff. I see it as a way to call the GOP’s bluff. Let the Bush tax cuts expire and pass the Obama tax cuts. Let the automatic spending cuts go in, and see how Congress faces the wrath of millions of seniors on Social Security and Medicare, as well as the former middle class hit hard by the recession. I think we’d see a lot of spending bills passed in a hurry.
Of course, I’m not going to advocate this position because there is more involved than just politics. There are real people, with real lives, and real families to feed. I am someone who thinks that human beings count more than deficits. Sometimes it feels like the GOP considers this to be a position of weakness.
Instead, it seems to me that their very inflexibility is what makes them weak.
Martha Thomases, Media Goddess, thinks the world didn’t end yesterday because George Clooney never called.